Rise in China services PMI adds to rebound signs

A mainland services-industry index has risen to its highest level this year, adding to evidence that the country's economic rebound is sustaining momentum as leaders prepare to map out a blueprint for reform.

The non-manufacturing purchasing managers' index advanced to 56.3 in October from 55.4 in September, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said yesterday. A number more than 50 indicates an expansion.

Stronger consumption and employment suggested in the report may bolster the government's confidence that the third- quarter economic recovery is holding up after two manufacturing indices last week rose more than estimated.

Top Communist Party officials will meet this week to decide policy changes that may help the mainland avoid a sharper slowdown in its longer-term expansion as the investment- and export-led growth model runs out of steam.

"Growth momentum will still be relatively robust" in the fourth quarter, said Lu Ting, head of Greater China economics at Bank of America in Hong Kong. "The room for a further improvement in the non-manufacturing PMI is limited so we should still avoid being too bullish," he said, pointing to a decline in new orders and a contraction in export orders in the report.

Lu estimated gross domestic product would rise 7.7 per cent in the fourth quarter from a year earlier, down from 7.8 per cent in the July-September period. The pace could rebound to close to 8 per cent in the first half of next year due partly to a low comparative base with 2013, he said.